Dunkin' Sweet Turns Sour: Stock Drops After Earnings
Dunkin' Brands saw its stocks drop over 6 percent on Wednesday, after seeing a decline in second quarter earnings amid rising costs.
Dunkin' Brands, the parent company of Dunkin' Donuts and Baskin-Robbins, saw its net income fall to 17.2 million from 17.3 million last year, despite an increase in international and same-store sales. It did see its revenue increase 4.4 percent to $157 million from $150 million.
The company, in a conference call with analysts, announced price hikes due to rising operational costs. It will institute price increases in its Baskin-Robbins stores, which have seen costs rise 18 percent, and could have a small price increase in its Dunkin' Donuts stores.
The earnings announcement comes a week after the company set the market on fire with its initial public offering (IPO). Dunkin' announced its IPO at $19 and quickly saw the share price jump up over 40 percent behind faith in the company's growth into "white space" opportunities.
After such a strong IPO offering a week before its earnings report, most analysts surmised that the company would announce strong numbers on Wednesday. The numbers aren't horrible, but still show issues that make analysts uneasy.
One of the biggest question marks heading into the earnings report was how much same-store sales growth the Massachusetts-based company would see. The company has struggled with its growth in one-year or older stores, posting only a 2.3 percent growth last year.
It managed to best its same-stores sales growth from last year, but still didn't see anywhere near the growth competitor Starbucks achieved this quarter.
Dunkin' Brand stores had an overall same-store sales growth of 3.2 percent, though that number did rise to 3.8 percent when evaluating just Dunkin' Donuts.
Coffee king Starbucks, considered to be the company's main competition, posted an 8 percent same-store sales growth number. Starbucks might lack in customer loyalty to Dunkin' Donuts, but has continued to post better sales growth numbers.
Part of this could be the company's large growth internationally. Interestingly, Dunkin' has shown good international numbers, but has focused its future growth efforts domestically.
Dunkin' Brands hopes to add 250 new stores per year, eventually hoping to double its total store base over the next 20 years.
The company was trading down 6.05 percent, at $26.08, an hour and a half after the markets opened.
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